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Insurance Law

Appeals Court Makes New Law: Insurer Must Pay Interest On Settlement After 30th Day Without Payment

Singler v. Zurich American Ins. Co., No. 2014AP391 (Wis. Ct. App. Sept. 16, 2014), [enhanced version available to lexis.com subscribers], involves Zurich’s eve-of-trial settlement of an automobile liability claim for $1.9 million. Zurich’s attorney told the plaintiff’s attorney that it would take “at least a month to get the check authorized out of Australia[.]” The settlement did not specify any time for payment. Forty or so days after the settlement had been reached the plaintiff’s attorney moved for a court order seeking 12% interest on the settlement after the 30th day.

It seems to me that there were some complexities in getting the settlement payment sorted out. The insured’s driver’s employer was an Australian corporation and there was a $2 million SIR. Zurich’s counsel explained it like this: “So, therefore, they have to tender what is left of the first 2 million and subtract defense costs as well as the settlement in a companion case.... And then the XL carrier who has the insurance after that has to determine how much they’re going to pay.”

Nonetheless, the court granted the motion and awarded 12% interest beginning thirty days after the settlement. The court felt that, under the circumstances – with a settlement seemingly on the horizon and Zurich being in the business of paying losses -- Zurich should have “set the wheels in motion” and been able to issue a check in a week.

The Wisconsin appeals court held that interest was owed – albeit only 5% annually and not 12% based on certain statutory considerations. But, more importantly, the court agreed with the concept that interest was owed on an unpaid settlement after the 30th day: “The parties agree that their settlement agreement did not contain any time limit for payment. They also agree that, when a contract does not contain a time limit for performance, a reasonable time is implied.”

The court concluded that, based on the following considerations, it was not clearly erroneous that it was reasonable for Zurich to expect to pay the settlement within 30 days: “At the time of settlement, Singler’s case had been pending for an extended period of time; Zurich had previously made settlement offers of $1.5 million and $1.75 million; The parties did not settle until the eve of trial; consequently, as of the settlement date, Zurich would have known that, in a relatively short time, the jury could award damages in the range of Zurich’s previous settlement offers; Zurich had been involved in the trial and settlement of a companion case; and Zurich was in the business of covering losses.”

Coverage Opinions is a bi-weekly (or more frequently) electronic newsletter reporting or providing commentary on just-issued decisions from courts nationally addressing insurance coverage disputes. Coverage Opinions focuses on decisions that concern numerous issues under commercial general liability and professional liability insurance policies. For more information visit www.coverageopinions.info.

The views expressed herein are solely those of the author and not necessarily those of his firm or its clients. The information contained herein shall not be considered legal advice. You are advised to consult with an attorney concerning how any of the issues addressed herein may apply to your own situation. Coverage Opinions is gluten free but may contain peanut products.

    Randy Maniloff is Counsel at White and Williams, LLP in Philadelphia. He previously served as a firm Partner for seven years and transitioned to a Counsel position to pursue certain writing projects including Coverage Opinions . Nonetheless he still maintains a full-time practice at the firm. Randy concentrates his practice in the representation of insurers in coverage disputes over primary and excess obligations under a host of policies, including commercial general liability and various professional liability policies, such as public official’s, law enforcement, educator’s, media, computer technology, architects and engineers, lawyers, real estate agents, community associations, environmental contractors, Indian tribes and several others. Randy has significant experience in coverage for environmental damage and toxic torts, liquor liability and construction defect, including additional insured and contractual indemnity issues. Randy is co-author of “General Liability Insurance Coverage - Key Issues In Every State” (Oxford University Press, 2nd Edition, 2012). For the past twelve years Randy has published a year-end article that addresses the ten most significant insurance coverage decisions of the year completed.

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